Almost 40 per cent of SMEs are cancelling their Christmas party this year, according to a survey of UK employers by the Employment Law Advisory Services (ELAS).

As reported by Fresh Business Thinking, half say it’s because they can’t afford a corporate Christmas party any more, and 16 per cent feel it would be insensitive to hold a party in the face of redundancies and lay-offs.

“For most businesses, Christmas parties have long been the only opportunity for staff to socialise together in a non-work capacity and to bond as colleagues,” explained Peter Mooney from ELAS.

The survey noted a particular difference in locations; SMEs in the North West were the hardest hit with nearly half (47 per cent) saying they wouldn’t hold or contribute to a corporate Christmas party, give a bonus or award additional time off. However, in the South East, 72 per cent of SMEs were planning on holding a party with the majority of SMEs planning on spending the same, or more, than they did last year.

However the Chartered Management Institute said that the recession shouldn’t be an excuse for employers to avoid acknowledging the efforts of their employees. They told BBC News that two-thirds of managers believe corporate Christmas parties help improve employee engagement.

“The whole point of the Christmas party is saying thank you for all the things they have done throughout the year, it’s an appropriate time to draw a line under a year and say, ‘let’s move forward now;,” explained chief executive Ruth Spellman.